CNBC, a respected global news source, recently ran an article about the predicted effects of changes in the UK gambling tax regime set to take effect in December 2014, and which includes the introduction of a 15% point of consumption (POC) levy on offshore online gaming operators.
CNBC quotes gaming analysts for Davy Research, David Jennings and Simon McGrotty as saying: “The introduction of the POC tax is likely to cause a seismic shift in the competitive landscape of the UK online gaming market.”
The analysts believe that remote businesses such as the Gibraltar based Ladbrokes and William Hill gambling companies will move into other overseas markets such as Europe and Australia, in a bid to offset the losses they expect to entail through the new UK gambling tax.
Another group of analysts, City analysts James Ainley and Josh Lipman believe that a move into new markets could offset losses by up to 80%.
Companies such as the Irish bookmaker, Paddy Power and the UK entity, William Hill, already have a strong presence in Italy and Spain, and they are expected to move further into these markets because of new local taxes.
“Italy and Spain continue to offer the most interesting opportunity outside the UK, given the large market size, high propensity to gamble, favorable taxation and low penetration of online gambling to date,” Ainley and Lipman are quoted in the CNBC article.
That is not to say that UK gambling operators are not facing an uphill battle to grab small pieces of what Jennings sees to be a “saturated” European gambling market in general.
Australia, however, is seen as a totally different ball game.
“In Australia, the competitive landscape is particularly attractive,” said Jennings, “because about 85% of the market is dominated by three players, compared with the UK, where the top five companies account for 55-60% of the market.”
A number of UK operators have already made a dent in the Australian gambling market, including Paddy Power and William Hill, which recently purchased the local online bookmaker TomWaterhouse.com for around £20 million.
Jennings added that gambling companies are seeking out sizeable and sustainable markets and since the Australian market is regulated, with a competitive landscape, European operators would feel right at home since they are used to competing in the regulated UK gambling market.
